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SunPower Beats Earnings on Strong Demand

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SunPower Corp.’s (SPWR - Free Report) second quarter 2013 adjusted earnings per share of 48 cents surpassed comfortably exceeded the Zacks Consensus Estimate of 11 cents as well as the year-ago profit level of 8 cents. The company’s stellar results were backed by strong demand for its solar panels in utility, commercial and residential projects.

GAAP earnings during the quarter were 15 cents per share in contrast with the year-ago GAAP loss of 71 cents per share.

Operational Results

SunPower generated revenues of $650.0 million, lower than the Zacks Consensus Estimate of $689.0 million and the year-ago figure of $650.7 million.

During the quarter under review, revenues generated in the Americas were $441.8 million compared with $447.1 million in the prior-year period. Revenues in Europe, the Middle East and Africa were $107.0 million versus $155.4 million in the year-ago quarter. Revenues from Asia-Pacific were $101.2 million, up from $48.2 million in the year-ago period.

SunPower’s gross margin for the quarter expanded to 19.5% from 15.1% a year ago.

Financial Condition

SunPower at the end of the reported period had cash and cash equivalents of $580.6 million, compared with $457.5 million at the end of 2012. Net cash from operating activities was $66.2 million compared to ($9.1) million in the year-ago quarter.

Our Take

SunPower Corp.’s consistent research and development efforts to improve solar cell efficiency have yielded positive results. The solar panels produced by the company have one of the highest conversion rates and generate more than 50% energy than conventional panels.

The increasing focus in the U.S. on green energy will see more and more power being produced from solar cells. The high conversion capacity of SunPower’ solar panels will play a vital role in the U.S. solar industry. A major homebuilder KB Home (KBH - Free Report) has partnered with SunPower to build more than 1,500 solar energy powered homes across the country.

SunPower’s solar cells are thus gaining traction in the U.S. Recently, SunPower and Bechtel Corp. installed 749,000 solar photovoltaic (PV) modules at the 250 MW California Valley Solar Ranch (CVSR) PV plant. The plant owned by NRG Energy Inc. (NRG - Free Report) will be operated jointly with SunPower for the next two years.

The SunPower stock is making headways with a Zacks Rank #1 (Strong Buy). Another solar module manufacturer JinkoSolar Holding Co., Ltd. (JKS - Free Report) also looks good with a Zacks Rank #2 (Buy).

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